Ownership Pattern and Governance–Performance Relation: Evidence from an Emerging Economy

Abstract

The article examines whether different corporate governance practices and ownership patterns influence firm performance and value creation in an emerging market context. The study establishes that the governance–performance relation depends highly on the estimation tools applied. While the pooled regression or fixed effects panel model may provide spurious and biased relations, the system generalized method of moments (GMM) model provides superior and valid results by addressing all types of endogeneity problems. The results show that firms with a separate CEO and chairperson outperform firms with CEO duality. Also, higher executive salary leads to improved firm performance. Moreover, higher promoter shareholding leads to greater value creation and improved firm performance, and domestic institutional investors (DII) have a significant impact on firm performance.